Correlation Between IShares Core and BlackRock ESG

Can any of the company-specific risk be diversified away by investing in both IShares Core and BlackRock ESG at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining IShares Core and BlackRock ESG into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between iShares Core MSCI and BlackRock ESG Multi Asset, you can compare the effects of market volatilities on IShares Core and BlackRock ESG and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in IShares Core with a short position of BlackRock ESG. Check out your portfolio center. Please also check ongoing floating volatility patterns of IShares Core and BlackRock ESG.

Diversification Opportunities for IShares Core and BlackRock ESG

0.37

Correlation Coefficient

IShares Core  BlackRock ESG

Weak diversification

The 3 months correlation between IShares and BlackRock is 0.37. Overlapping area represents the amount of risk that can be diversified away by holding iShares Core MSCI and BlackRock ESG Multi Asset in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on BlackRock ESG Multi and IShares Core is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on iShares Core MSCI are associated (or correlated) with BlackRock ESG. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of BlackRock ESG Multi has no effect on the direction of IShares Core i.e., IShares Core and BlackRock ESG go up and down completely randomly.

Pair Corralation between IShares Core and BlackRock ESG

Assuming the 90 days trading horizon iShares Core MSCI is expected to generate 3.23 times more return on investment than BlackRock ESG. However, IShares Core is 3.23 times more volatile than BlackRock ESG Multi Asset. It trades about 0.08 of its potential returns per unit of risk. BlackRock ESG Multi Asset is currently generating about 0.12 per unit of risk. If you would invest  2,788  in iShares Core MSCI on October 11, 2024 and sell it today you would earn a total of  507.00  from holding iShares Core MSCI or generate 18.19% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Very Weak
Accuracy	99.66%
Values	Daily Returns

iShares Core MSCI  vs.  BlackRock ESG Multi Asset

iShares Core MSCI

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days iShares Core MSCI has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, IShares Core is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

BlackRock ESG Multi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BlackRock ESG Multi Asset has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, BlackRock ESG is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with IShares Core and BlackRock ESG

The main advantage of trading using opposite IShares Core and BlackRock ESG positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if IShares Core position performs unexpectedly, BlackRock ESG can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in BlackRock ESG will offset losses from the drop in BlackRock ESG's long position.

The idea behind iShares Core MSCI and BlackRock ESG Multi Asset pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the My Watchlist Analysis module to analyze my current watchlist and to refresh optimization strategy. Macroaxis watchlist is based on self-learning algorithm to remember stocks you like.